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RadioShack may turn to Chapter 11 bankruptcy protection

Even companies that have been known as top leaders in their industry, have a chance to fall prey to a recession. As technology changes, some companies no longer have the stronghold that they once did and start to lose revenue. After a long string of losses, a New Jersey company may turn to Chapter 11 in an effort to reorganize and become more attractive to a suitable buyer.

RadioShack, once an electronics retail giant, has been enduring consistent quarterly losses since 2012. With technology changes, fierce competition and online shopping to deal with, the company's sales drastically dropped. The company reported in a regulatory finding that, without some sort of outside help, it would be unable to continue to pay to stay in business much longer.

The company is currently in discussions to consider available options going forward. There is a possibility of restructuring or selling the company. If these options to not yield the desired results, the company may elect to file for Chapter 11 or to completely liquidate under Chapter 7 of the Bankruptcy Code. RadioShack's CEO has been working to redesign some stores and close others, but the company's lenders apparently do not approve of the idea. If the company goes forward with restructuring or filing for bankruptcy protection, there may be a chance to work with their contracts.

The company CEO stated that he is ready to take on the challenges that arise along the way. If the company chooses to file for Chapter 11, this may appear more attractive to a new buyer. According to a chief executive of a turnaround advisory firm, even if the company closes a lot of stores and becomes smaller, there is a chance that the brand will continue on because it is highly recognized. This could increase the chances of the name living on in the future, even if it's under a new owner. New Jersey businesses who are struggling can turn to Chapter 11 bankruptcy protection as a means of reorganizing, cutting unnecessary expenses and moving forward toward a successful future.

Source: dealbook.nytimes.com, "RadioShack Bankruptcy Filing Could Be Near", William Alden, Sept. 11, 2014

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